BILLS DIGEST NO. 90, 2011–12, 19 January 2012

Customs Amendment (Military End-Use) Bill 2011

Paula Pyburne
Law and Bills Digest Section

Date introduced:  2 November 2011

House:  House of Representatives

Portfolio:  Home Affairs

Commencement:  On the day after the Royal Assent.

Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill's home page, or through http://www.aph.gov.au/bills/. When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the ComLaw website at http://www.comlaw.gov.au/.

Purpose

The purpose of the Customs Amendment (Military End-Use) Bill 2011 (the Bill) is to amend the Customs Act 1901 (the Customs Act) to empower the Minister for Defence to prohibit the export of ‘non-regulated’ goods to a particular place or person.[1]

Background

The Australia-US Defence Trade Cooperation Treaty (AUS-US DTC Treaty) was signed on 5 September 2007 by former Australian Prime Minister, John Howard, and United States (US) President, George W Bush.[2]  The US Senate passed the Resolution of Ratification for the Treaty on 29 September 2010[3] and once Australia has enacted legislation in line with the AUS-US DTC Treaty requirements (that is, the Defence Trade Controls Bill 2011 which is the companion to this Bill[4]) the final step required is that the US President sign the Instrument of Ratification.  This will bring the Treaty into force.[5]

The main purpose of the AUS-US DTC Treaty is to remove certain agreed defence export restrictions between Australia and the US so that a more cost efficient and productive system can be facilitated.

Australia’s existing export control system is administered under the Customs Act and the Weapons of Mass Destruction (Prevention of Proliferation) Act 1995. The most significant aspect of the AUS-US DTC Treaty involves the Defence and Strategic Goods List (DSGL), which is published by the Minister for Defence under paragraph 112(2A)(aa) of the Customs Act. The DSGL:

…identifies the goods which Regulation 13E of the Customs (Prohibited Exports) Regulations 1958 prohibits from being exported from Australia unless a licence or permission has been granted by the Minister or an authorised person and that licence or permission is produced to a Collector of Customs before exportation.[6]

The Department of Defence’s Defence Export Control Office (DECO) administers ‘controls on the export of defence and dual-use goods’ and authorises export permits and licenses for this purpose.[7]

The Bill is intended to ‘reinforce Australia’s export controls by providing authority for intervention at the border of goods not otherwise regulated’, and which are being ‘exported for a military end-use which is contrary to Australia’s national interest’.[8]

Committee consideration

Senate

Although the companion to this Bill—the Defence Trade Controls Bill 2011—has been referred to the Senate Foreign Affairs, Defence and Trade Legislation Committee for inquiry and report, this Bill is not included in the scope of that inquiry.[9]

House of Representatives

On 3 November 2011, the House of Representatives Selection Committee referred this Bill and the companion Bill to the Joint Standing Committee on Foreign Affairs Defence and Trade for inquiry and report.  Michael Danby MP, Chair of the Joint Standing Committee subsequently tabled the following statement:

In view of the recent visit of the US President and the 60th Anniversary of the ANZUS Alliance, the Government has requested that these Bills be dealt with expeditiously by the Committee and that, if possible, an advisory report be presented to the House of Representatives this week.

The principal Bill, the Defence Trade Controls Bill 2011, has now been referred to the Senate Foreign Affairs, Defence and Trade Legislation Committee which has commenced its inquiry. Any concerns that stakeholders have in relation to the Bill may be considered by the Senate Committee.

Out of a desire to avoid needlessly duplicating the examination being conducted by the Senate Committee, to more efficiently progress the passage of the Bills through the Parliament and at the special request of the Government, the Committee has agreed not to further inquire into the Bills and recommends that the House of Representatives pass both Bills without amendment.[10]

The Bills were passed by the House of Representatives on 21 November 2011.

Financial implications

According to the Explanatory Memorandum, the Bill has no financial impact.[11]

Key provisions

Item 1 of the Bill inserts new Division 1AA—Export of goods for a military end-use—into the Customs Act. 

For the purposes of Division 1AA goods are, or may be, for a military end-use if the goods are, or may be, for use in operations, exercises or other activities conducted by an armed force or an armed group, whether or not the armed force or armed group forms part of the armed forces of the Government of a foreign country.[12]

Existing section 112 of the Customs Act provides for regulations to be made which prohibit the exportation of goods from Australia. The regulations may:

•       specify that the exportation of goods is prohibited absolutely

•       prohibit the exportation of goods in specified circumstances or to a specified place, or

•       prohibit the exportation of goods unless specified conditions or restrictions are complied with.

Notice prohibiting export

Proposed subsection 112BA(1) applies if all of the following conditions are satisfied:

•       the Defence Minister suspects that, if a person (referred to as the ‘first person’) were permitted to export particular goods to a particular place or person, the goods would, or may, be for a military end‑use

•       the military end-use would prejudice the security, defence or international relations of Australia and

•       the relevant goods are not already prohibited exports under section 112.

In that case, the Defence Minister may give the ‘first person’ a notice prohibiting that person from exporting those goods to the relevant place or person.  The trigger for the issue of the notice is mere suspicion about the military end-use—rather than, for example, reasonable suspicion.  This is a very subjective test—however, this threshold test is consistent with that employed in legislation such as the Weapons of Mass Destruction (Prevention of Proliferation) Act 1995.  The High Court has described a suspicion as being ‘more than a mere idle wondering whether [something] exists or not; it is a positive feeling of actual apprehension or mistrust amounting to a slight opinion, but without sufficient evidence’.[13]

A person commits an offence if the person knowingly exports goods to a particular place or particular person in contravention of a notice prohibiting export: proposed subsection 112BA(12).  The penalty for contravention is severe—10 years imprisonment or 2500 penalty units, or both.[14]

According to the Explanatory Memorandum:

The Minister’s decision to issue a prohibition notice will not be subject to merits review. This decision making power is personally vested in the Minister due to its highly sensitive nature and the fact that they involve issues of the highest consequence to government. Such decisions are of high political content and concern Australia's national interest, security and defence and may affect Australia's relationships with other countries. The approach of excluding this decision from merits review is consistent with the provisions of the Weapons of Mass Destruction (Prevention of Proliferation) Act 1995 where the authority for decisions under that remains solely with the Minister for Defence and is not subject to merits review.[15]

The Scrutiny of Bills Committee considered this comment in a recent Alert Digest stating that:

In the absence of merits review, the Committee is not aware of any scrutiny mechanisms for the exercise of the power. The Committee is therefore of the view that it would be appropriate for the Minister to report to Parliament on the use of the power.[16]

That being the case, the Scrutiny of Bills Committee stated that it would seek the Minister’s advice as to whether the Bill can be amended to require annual reporting to Parliament on the exercise of the discretionary power in paragraph 112BA(1)(a).[17]  At the time of writing this Bills Digest, that advice had not been received.

The lack of merits review should be considered in the context of proposed subsection 112BA(8) which provides that a notice is not a legislative instrument.[18]  This means that it will not be subject to the scrutiny of the Parliament in accordance with the terms of the Legislative Instruments Act 2003.

Content of the notice

Proposed subsections 112BA(2) and (3) provide that the notice must set out the Defence Minister’s reasons for giving the notice unless the Defence Minister ‘believes’ that the giving of those reasons would prejudice Australia’s security, defence or international relations. If the reasons are not disclosed in a notice, that fact must be stated in the notice: proposed subsection 112BA(4). In George v Rockett the High Court considered that the requirement that a person has a ‘belief’ is a higher test than merely having a ‘suspicion’ describing it as ‘an inclination of the mind towards assenting to, rather than rejecting, a proposition based on facts that are sufficient to create that inclination of the mind in a reasonable person’.[19] This is an objective test which is more stringent that the test which the Defence Minister is to apply in deciding whether to issue a notice in the first instance.

Period of the notice

A notice prohibiting export takes effect from the time the person receives the notice.[20]  It remains in force for the period specified in the notice, being not more than 12 months: proposed subsections 112BA(5) and (6).  However, proposed subsection 112BA(7) empowers the Defence Minister to send a subsequent notice to prohibit export.  That later notice can come into force on the same day that an earlier notice ceases to have effect.  There is no provision in the Bill to limit the number of consecutive notices prohibiting export which can be given to a person.  That being the case, the Bill operates so that, theoretically, the Defence Minister could permanently prohibit a person from exporting goods to a particular person or a particular place.

Special forfeited goods

Existing subsection 229(1) lists certain goods which ‘shall be forfeited to the Crown’.  Item 3 of the Bill inserts proposed paragraph 229(1)(na) so that all goods which are the subject of a notice prohibiting export under subsection 112BA(1) and which have been put on a ship or aircraft for export, or are brought to any wharf or place for export, are also to be forfeited to the Crown.  Item 2 of the Bill amends the definition of ‘special forfeited goods’ in existing subsection 183UA(1) to include a reference to paragraph 229(1)(na).

The effect of these two amendments is to allow goods which are the subject of a notice prohibiting export to be seized without a warrant.

Members, Senators and Parliamentary staff can obtain further information from the Parliamentary Library on (02) 6277 2434.

© Commonwealth of Australia

Creative Commons

With the exception of the Commonwealth Coat of Arms, and to the extent that copyright subsists in a third party, this publication, its logo and front page design are licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia licence.

In essence, you are free to copy and communicate this work in its current form for all non-commercial purposes, as long as you attribute the work to the author and abide by the other licence terms. The work cannot be adapted or modified in any way. Content from this publication should be attributed in the following way: Author(s), Title of publication, Series Name and No, Publisher, Date.

To the extent that copyright subsists in third party quotes it remains with the original owner and permission may be required to reuse the material.

Inquiries regarding the licence and any use of the publication are welcome to webmanager@aph.gov.au.

Disclaimer: Bills Digests are prepared to support the work of the Australian Parliament. They are produced under time and resource constraints and aim to be available in time for debate in the Chambers. The views expressed in Bills Digests do not reflect an official position of the Australian Parliamentary Library, nor do they constitute professional legal opinion. Bills Digests reflect the relevant legislation as introduced and do not canvass subsequent amendments or developments. Other sources should be consulted to determine the official status of the Bill.

Feedback is welcome and may be provided to: web.library@aph.gov.au. Any concerns or complaints should be directed to the Parliamentary Librarian. Parliamentary Library staff are available to discuss the contents of publications with Senators and Members and their staff. To access this service, clients may contact the author or the Library‘s Central Entry Point for referral.

ISSN 1328-8091

[1].               ‘Non-regulated’ goods are goods that are not already prohibited exports under section 112 of the Customs Act 1901.

[2].               J Howard (former Prime Minister), Australia-United States Treaty on Defence Trade Cooperation, media release, 5 September 2007, viewed 8 November 2011, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22media%2Fpressrel%2F7I6O6%22

[3].               Government of Australia, ‘Australia-US Defence Trade Cooperation Treaty: Factsheet’, Department of Foreign Affairs and Trade, AUSMIN 2010, November 2010, viewed 8 November 2011, http://www.dfat.gov.au/geo/us/ausmin/Defence-Trade-Cooperation-Treaty-fact-sheet.pdf.

              The Treaty was not mentioned during the most recent AUSMIN meeting. Press conferences and independent press releases from Australia and the US made no reference to the Treaty. Only the Joint Communiqué provided a minor remark about the Treaty increasing interoperability between the two countries. Government of Australia and the Government of the United States, Australia-United States Ministerial Consultations (AUSMIN) 2011, Joint Communiqué, San Francisco, 15 September 2011, viewed 8 November 2011, http://foreignminister.gov.au/releases/2011/kr_mr_110916b.html

[4].               N Brangwin and P Pyburne, Defence Trade Controls Bill 2011, Bills Digest, no. 91, 2011-12, Parliamentary Library, Canberra, 2011.

[5].               Government of Australia, ‘Changes to Australia’s export control system: industry information session’, Department of Defence, presentation, December 2010, p. 20, viewed 15 November 2011, http://www.defence.gov.au/strategy/deco/usec/presentation/US_Treaty_Industry_Presentation.pdf

[6].               Australian Government, Explanatory Statement issued by the authority of the Minister for Defence Customs Act 1901, Defence and Strategic Goods List Amendment 2011 (No. 1), viewed 8 November 2011, http://www.comlaw.gov.au/Details/F2011L02061/Explanatory%20Statement/Text and Explanatory Memorandum, Defence Trade Controls Bill 2011, p. 10, viewed 8 November 2011, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22legislation%2Fems%2Fr4700_ems_9e976e24-2fbc-48ae-ad31-dcf1d61d8eb7%22

[7].               Defence Export Control Office, Department of Defence website, viewed 8 November 2011, http://www.defence.gov.au/strategy/deco/default.htm

[8].               Explanatory Memorandum, Customs Amendment (Military End-Use) Bill 2011, p. 2.

[9].               Details of the inquiry are at: http://www.aph.gov.au/Senate/committee/fadt_ctte/trade_controls/index.htm

[10].               M Danby, ‘Report from Committee: Defence Trade Controls Bill 2011 and Customs Amendment (Military End-Use) Bill 2011’, House of Representatives, Hansard, 21 November 2011, p. 12912, viewed 11 January 2012, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22chamber%2Fhansardr%2Fe3438d90-354a-4802-8540-6d3a85164a3a%2F0100%22

[11].               Explanatory Memorandum, Customs Amendment (Military End-Use) Bill 2011, p. 2.

[12].               Proposed subsection 112BA(13).

[13].               Queensland Bacon Pty Ltd v Rees [1966] HCA 21; (1966) 115 CLR 266 (6 April 1966), viewed 12 January 2012, http://www.austlii.edu.au/au/cases/cth/HCA/1966/21.html

[14].               Under section 4AA of the Crimes Act 1914, a penalty unit is equivalent to $110. This means that the maximum pecuniary penalty in this case is $275 000.

[15].               Explanatory Memorandum, p. 5.

[16].               Standing Committee for the Scrutiny of Bills, Alert Digest no. 14 of 2011, Senate, Canberra, 23 November 2011, p. 8,               viewed 13 January 2012, http://www.aph.gov.au/Senate/committee/scrutiny/alerts/2011/d14.pdf

[17].               Ibid.

[18].               As a notice would apply the law in a particular case, as distinct from determining the law or altering its content, it would not be unusual for it to be designated as not being a legislative instrument.

[19].               George v Rocket [1990] HCA 26; (1990) 170 CLR 104 (20 June 1990), viewed 11 January 2012,               http://www.austlii.edu.au/au/cases/cth/HCA/1990/26.html .

[20].               Proposed section 112BB sets out how notices are to be given.